Tag Archives: BusinessWeek

The Tablet is the Computer

One thing discussed often and at great length in nerdy circles these days is this: Is the tablet—by which we really mean the Apple iPad, because it created the market, and presently accounts for nearly two thirds of it—a computer. A PC, if you will?

Some say that the iPad is not really a computer. It has no keyboard. People don’t sit at desks to use it. It lacks the horsepower of most of today’s computers. So they think it’s a big smartphone. I think they are wrong. They misunderstand what is happening.

This is not hard to see in action. Wandering around an airport cafe the other day, everyone had at least one device. But those with an iPad were by far the most comfortable, whether curled up in an armchair or sitting at a table. And they were doing everything: I saw one guy watching a movie, another writing a letter, another CEO-type playing Angry Birds. I was thrown out of the cafe before I was able to finish my research.

At the hairdressers no fashion magazines were being read: Everyone was cradling an iPad, oblivious to the time and their hair being teased into odd shapes.

So let’s look at the data.

Surveys by comScore, a metrics company, point to what is really happening. In studies in the U.S. last October and of Europe released this week [Registration required], they noticed that during the week tablet usage spikes at night—as computer usage drops off. So while during the work day folk are using their PCs, come evening they switch to tablets. (Mobile usage, however, remains flat from about 6 pm.)  The drop in PC usage is even more pronounced in the U.S., while tablet usage in the evening continues to rise until about 11 pm:

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In other words, people are using their tablets as computers. Not as mobile devices. Not as replacements for their phone. They’re using them, in the words of a friend of mine, as a replacement to that ancient computer sitting in the corner gathering dust that gets booted up once in a while to write an email or a letter to Granny on.

Now not everyone is using tablets like this. The first surveys of tablet usage indicated they were using them as ‘TV buddies’—things to play with while watching TV. But this still doesn’t quite capture what is happening.

One study by Nielsen found last May that 3 out of 10 Americans were using their computer less frequently after buying a tablet. What’s surprising about this figure is that it’s higher than for all other devices—including gaming consoles, Internet-connected TVs and portable media players. Given the plethora of games and stuff you can get for a tablet, surely more people would be saying that they use these devices less than their netbook, laptop or desktop, now they have a tablet?

That survey was done when less than 5% of U.S. consumers owned one. A year on, that figure is much higher. Pew’s Internet and American Life Project reported on Jan 23 that the number of American adults who owned a tablet grew from 10% to 19% over the holiday period; although their data may not be directly comparable with Nielsen’s it sounds about right. And represents an unprecedented adoption of a new device, or computing platform, or whatever you want to call it.

(Pew also surveys ebook readers and finds the same results. But I think we’ll see a serious divergence between these two types of device. Yes, some tablets are good for reading and some ereaders, like the Kindle Fire, look a lot like a tablet. But they’re different, and used in different ways. I think that while the market will overlap even more, they’ll be like more like the laptop and netbook markets, or the ultrabook and the PC market: they may do similar things but the way people use them, and the reason people buy them, will differ.)

This is rapidly altering the demographics of the average tablet user. Back in 2010, a few months after the first iPad was launched, 18-34 year olds accounted for nearly half the market, according to another Nielsen report. A year on, that figure was down to a little over a third, as older folk jumped aboard. Indeed the number of 55+ iPad users doubled in that period, accounting for more than 25-34 year old users.

(Pew’s figures suggest that while older folk have been slower to adopt, the rate of growth is picking up. Around a quarter of adults up to the age of 49 now have a tablet in the U.S. (a shocking enough figure in itself.) Above 50 the number comes down. But the telling thing to me is that the rate of growth is more or less the same: about a fourfold growth between November 2010 and January 2012. While a lot of these may have been gifts over the holidays, it also suggests that the potential is there.)

So it’s pretty simple. The tablet, OK, the iPad came along and reinvented something that we thought no one wanted—a tablet device with no keyboard. But Apple’s design and marketing savvy, and the ecosystem of apps and peripherals, have made the tablet sexy again. Indeed, it has helped revive several industries that looked dead: the wireless keyboard, for example. ThinkOutside was a company in the early 2000s that made wonderful foldable keyboards for the Palm, but couldn’t make it profitable (and is now part of an apparently moribund company called iGo).

Now look: the website of Logitech, a major peripherals company, has the external keyboard and stand for the iPad as more or less its top product. Logitech reckon a quarter of tablet users want an external keyboard, and three quarters of them want their tablet “to be as productive as their laptop.” Most peripheral companies offer a kind of wireless keyboard, and there are more on the horizon.

And as BusinessWeek reported, the highest grossing app on the iPad appstore this Christmas wasn’t Angry Birds; it was a program for viewing and editing Microsoft Office documents, called QuickOffice. The app itself is not new: it’s been around since 2002, and a paired-down version came preinstalled on dozens of devices. But people wouldn’t shell out the extra $10 for the full version—until the iPad came along. Now they happily pay $20 and the company sold $30 million’s worth in 2011. (BusinessWeek links this to growing corporate interest in the iPad but you can see from comScore’s data that this is not necessarily correct. The tablet is a personal device that is mostly used outside the office.)

So. There’s a new industry out there, and it’s for a device that’s not a phone, though it has the same degree of connectivity; it’s not a desktop, though it should be able to do all the things a desktop can do; it’s not a laptop, though it should make the user as productive as a laptop can. And it’s many more things besides: a TV buddy, a sort of device to accompany your downtime in cafes, salons or on the couch.

Gartner, a research company, reckon that from about 17.5 million devices sold in 2010 there will be 325 million sold in 2015. An 18-fold increase. In the same period the annual sales of notebooks will only have doubled, and desktops will have grown by, er, 5%. Hard not to conclude from that that the tablet, OK, the iPad, is going to be everyone’s favorite computer—replacing the desktop, the laptop and whatever ultrabooks, netbooks or thinkbooks are the big thing in 2015.

(Update: This was written before Apple’s results. Tim Cook has confirmed the PC is their main competitor.) 

The Real Conversation

We all keep talking about the idea of conversations — the “market as a conversation” (as opposed to the companies shouting at us to buy their stuff) and, nowadays, as the blogosphere as the manifestation of this. The problem is: A conversation between whom and whom? And, more important, what happens when the conversation starts getting spun, as all conversations do?

I’ve grown increasingly skeptical of the genuineness of this conversation: as PR gets wise, as (some) bloggers get greedy and (other) bloggers lose sight of, or fail to understand the need to maintain some ethicaleboundaries, the conversation has gotten skewed. I’m not alone in this, although cutting through to the chase remains hard. The current case of the Wal-Mart/Edelman thang, where the chain’s PR firm reportedly sponsored a blog about driving across America and turned it into a vehicle (sorry) to promote Wal-Mart, helps bring clarity to some issues, or at least to highlight the questions.

(Because there’s so much out there already on this, I should probably point out the facts as we know them: A couple hoping to drive across the country , BusinessWeek reported, discovered that Wal-Mart allows Recreation Vehicle users (RVers) to park in their lots for free, so they decided to do that every place they stopped. They sought the approval of an organisation called Working Families for Wal-Mart, an organization set up by Edelman to fight bad press against the chain. The organisation decided to sponsor the couple’s entire trip, paying for the couple to fly to Las Vegas, “where a mint-green RV would be waiting for them, emblazoned with the Working Families for Wal-Mart logo.” The group also paid for gas, set up a blog site, and paid the woman a freelance fee for her entries. The final post on the blog discloses all this, including the connection between the couple and Edelman. But until then the only evidence of a link to Wal-Mart was a banner add for the Working Families group.)

This is how I’d put the issues:

  • Can a blog written by someone with an interest beyond merely informing the reader be ever considered something other than promotion for that interest, however well-concealed or unconscious? We get all upset about PayPerPost (rightly so) but far more insidious are blogs that earn their wages in less obvious ways.
  • What happens to a conversation when it turns out to be between people who aren’t who they pretend to be? The conversation, in this case, appears to be between, not two ordinary folk casually mentioning how good Wal-Mart is on their travels, but between the PR company and their employer.
  • When is a spokesperson not a spokesperson? How should we regard Edelman’s Steve Rubel if the one thing he’s not really covering in his blog is the issue about his own company? At the time of writing the story’s been out there for three days already, and not a mention, even a “I can’t comment on this at the moment, let me get back to you.” Given that Steve is well-versed in these nuances, I’d expect him to be quicker off the mark in this case, company sensitivities and procedures notwithstanding. (Update: Steve has now, on the fourth day, posted something.)

Why do I sometimes feel we’re caught in a kind of Groundhog Day in the blogosphere, where we are doomed to repeat ourselves until we learn the lessons our forebears learned? Are we so arrogant that we think we’re smarter? The lessons are:

  • The Chinese Walls aren’t just for the Chinese. They’re for us: to protect us against conflicts of interest, snake-oil salesman, shysters and shills. These walls were built over centuries, and we shouldn’t think we’re so smart we don’t need them, however imperfect they are.
  • You write to promote your company, however tangentially, and you speak for that company. It’s not a cherrypicking job. You can’t just ignore topics you don’t like the look of. If you don’t know what the line is, find out and tell your audience asap. If the story is wrong, get your version out asap.
  • Define the conversation, and the conversationalists. Too much talk about conversations, already. It’s a nice, neutral, inclusive word. But it’s not really. Because most of the time we don’t know who’s talking, and what their real purpose is. When PR firms with clients, or venture capitalists with an interest in seeing their investments rise in value, or whatever, start to get involved they naturally want to steer the conversation a certain way. Nothing wrong with that, except they must accept that they remain on one side of the conversation. They can’t claim to be on both sides. Journalists learned this a long time ago. It’s time we all remembered it.

Teaching Kids to Get into Interactive Debt

Next mealtime, expect your kids to pester you to take out a loan on a new Scion. They’ll probably have filled in the forms for you.

A month ago the NYT wrote about how a kids’ virtual world website, Whyville, was cutting a deal with Toyota to promote the Scion, allowing the youngsters to buy a virtual car in exchange for clams, the Whyville currency they earn by solving puzzles (read Heather Green’s piece over at BusinessWeek for a good overview of Whyville). If you’re having trouble following this, join the club: Think product placement in a kids’ version of Second Life. The idea here is that the 8–15 year olds who inhabit this virtual world would get all excited about the “small, boxy” Scion, buy it to zip around the virtual island and then start pestering their parents to buy a real one.

The idea worked. The NYT says that visitors to the site mentioned the word Scion more than 78,000 times. A month later, the term “Scion” has been used another 120,000 times and Whyvillians — the kids playing the online game — have purchased more than 1,200 Scions and gone on 140,000 rides in their cars.  As NYT quoted the chief operating officer for Whyville, Jay Goss: “By definition, this is a sponsor of Whyville that can’t have as its customers the kids who visit the site. But they know that kids influence parents, and kids grow up.”

Now apart from the general creepiness of how much the folks who run Whyville know about what their citizens are up to, and the extension of the old Pester Factor from kids urging parents to buy them toys to urging them to buy new whole cars, get this: As of today, they can buy a virtual Toyota Scion xB on credit, “learning in the process about interest rates, down payments, credit and leasing and their applications in real life”. This from a press release:

“Whyville Scion Solutions is a perfect example of motivated, engaged learning,” explains Dr. Jen Sun, President of Numedeon, Inc., Whyville’s parent company. “The Scions are a huge hit with our kids. They want cars! But most citizens just don’t have enough clams.  We’ve set up the motivation for them to learn what it means to take out a loan.  They’ll learn about interest rates, down payment, credit history, and, perhaps most important of all, being responsible.  If you default on your loan, you’ll lose your car, and your credit history will be ruined so that you can’t take out another loan.  Educators and researchers know that students learn best when they really care about the topic.  That’s exactly what we try to do in Whyville.”

This is all done via more product placement, this time by a virtual Toyota Financial Services advisor “who walks them through the loan process and helps them learn about their “WhyCO” scores.  The WhyCO is designed to emulate the FICO® in real life.  A Whyvillian’s WhyCO score depends on a number of factors including his virtual income, ownership of a Whyville house or business, number of log-in days in Whyville, and leadership roles in the community.  Based on these factors, a loan application is approved or rejected. Citizens who do not qualify for a loan by themselves can get loans if they are co-signed by wealthier friends. The Toyota Financial Services advisor will also point applicants to on-line resources to help applicants understand the details of financing, leasing, interest rates and credit.”

On one hand I applaud the idea. Why shouldn’t kids learn about buying on the Never Never, plunging into debt, meeting the Repo Man, getting thrown out of their house and generally living beyond their means? But is the idea of buying things you can’t actually pay for the sort of lesson one should be teaching kids? My grandad would be turning in his grave. But not for Whyville — in only a few days since opening, the Scion Solutions office has already approved several thousand loans — and not for Toyota Financial Services, which whose “interactive marketing manager”, Maria Tirado, says

“We’d like to have educated customers down the road, and this program is a terrific opportunity to help tweens understand the process of financing a vehicle, everything from interest rates to FICO scores to repaying the loan.”

Does this mean kids, now thoroughly familiar with the credit process, will now pester their parents to buy a new car with a loan? Is this the world we’ve been working towards?

Google’s Real Problem

There’s some interesting chat about whether Google is in trouble, although none of the pieces ask the question that I think is the most important one. BusinessWeek points to the fact that none of its new products are really gaining traction, which may be less down to the quality of those products — Earth, Finance, Chat etc — and more down to the fact that the whole point about Google for most people is keeping things simple:

The problem is that every time Google branches out, it struggles with the very thing that makes its search engine so successful: simplicity. The minimalist Google home page offers a stark contrast with the cluttered sites of key rivals Yahoo and MSN. People go to Google to find information fast. So Google can’t showcase its plethora of new products without jeopardizing this sleek interface and the popularity that generates a $6 billion geyser of cash from search ads. But the lack of exposure for its new products means only 10% of Google visitors use it for anything other than Web and image searches, says Hitwise.

To that I’d add the fact that it’s not just about exposure. Most people use the Internet for simple things, like finding stuff. They’re just not that interested in other things, however much we’d like them to be.

Meanwhile Robert Scoble wonders aloud why there is no real Google presence at the Gnomedex conference, a select gathering of developers and dweebs. And someone called SlashChick writes along the same lines as BusinessWeek, pointing out that Google’s approach of allowing employees to use 20% of their time developing new ideas may be fine when it’s a private, smallish company, but now it’s getting big won’t work so well if those projects make only a few hundred thousand dollars for the company. Alongside the earnings from AdSense, assigning employees to maintain these products will be hard to justify:

Once Google realizes they have to cut back and only continue development on the projects that did “stick”, inevitably, they will crush a few of their developers’ hearts. I have a feeling some of those developers may even become jaded and go out and start their own companies (sort of like the many software companies spawned by former Microsofties in Redmond.) Those companies may even grow to become quite successful. Hmm…

Good points, and it’s interesting to see how this view leaves Google vulnerable. Of course, it only needs one of these products to be vaguely as successful as search to draw enough users to justify it. And perhaps Google is hoping that one of its Microsoft-killers will kick in, and then the tables will be turned.

But all this rests on the idea that Google Search and AdSense continue their symbiotic relationship. The first provides dominant search, the second provides dominant ads that (for the most part) come from people using Google Search. AdSense would never have been successful were it not for Search, since the latter gets the eyeballs, the former brings in the cash. But what happens when one starts poisoning the other? What happens if AdSense starts to undermine the efficacy of Search? I’d argue this is already happening: web spammers are already successfully manipulating search results so that users visit their AdSense-laden web sites. This is happening with both ordinary search and News Search. Despite the obvious conflicts of interest here, most worrying for Google’s shareholders is the idea that its search engine may not be good enough anymore. Is this what’s keeping Google’s developers away from Gnomedex?

More On Google’s Masterplan

BusinessWeek pick up the theme of Google taking on the world. With the ability to track shipments and airplanes in real time via Google, the search engine keeps eyeballs on its website longer. But “Google is providing this new shipment tracking service even though it doesn’t have a partnership with FedEx. Rather, Google engineers have reprogrammed it to query FedEx directly with the information a user enters and provide the hyperlink direct to the customer’s information.”

But, BusinessWeek point out, “with every new service, Google takes a slice of someone else’s pie. Its ability to find pizza places within any given Zip code ultimately eliminates the use of YellowPages. Using it to find word definitions diminishes the business proposition of online dictionaries.”

The argument goes that “Google becomes the omnipresent middleman and a clear and present danger to just about any company that relies on the Internet for commerce.” But where is the revenue? I think BusinessWeek is right in saying the money will be in providing the gateway to those sites. Most folk I know go to Google first, indeed have it as their homepage. The more you can access from that fast-loading, uncluttered page, the more you’ll use it as your homepage. Who cares where you go next?

It has nothing to do with stickiness in the way we used to think of it. Google doesn’t need people to stay at Google. But folk like UPS and FedEx need to have the link with Google — especially if their competitors have it. For them Google becomes their customers’ first stop. Whether it’s cinema tickets, airline tickets, packages or whatever, Google will act as a kind of fast-searching gatekeeper for other sites. Those other sites may not have much choice — they don’t already, with the site: hack on Google working as a better search engine for individual sites than the site’s search page — but they’ll all draw benefit. And presumably Google will collect a toll, in advertising or something else.

It’s the New Portal: Empty , except for what you need, and fast.